…says oil boom sets country apart as Caribbean growth gap widens

Guyana’s oil-driven economic expansion continues to set it apart from other Caribbean economies, with the country recording exceptionally rapid and sustained gross domestic product (GDP) growth since 2020 as offshore oil production scales up, according to the World Bank’s latest Latin America and the Caribbean (LAC) Economic Update.
The report, released on Tuesday, said Guyana’s expansion has been accompanied by rising fiscal revenues, improved external balances and a declining public debt-to-GDP ratio.
However, it noted that the pace of growth also underscores the need for stronger public investment management, increased institutional capacity and policies to ensure that oil wealth translates into broad-based and inclusive development.
The World Bank described the Caribbean as having a “dual-track” economic outlook, with Guyana and Suriname benefiting from commodity-driven expansion while tourism-dependent island economies face more moderate growth amid high energy and transportation costs.
“Guyana’s unprecedented oil-driven expansion continues to pull up the subregional averages,” the report stated, noting that the country’s performance contrasts with the more tempered post-pandemic recovery of tourism-dependent economies.
The report said the widening gap reflects a structural divide between resource-abundant commodity exporters and service-reliant economies across the Caribbean.
Among commodity exporters, Trinidad and Tobago experienced a sharp contraction during the pandemic amid weaker energy prices, while Suriname also recorded a significant decline in economic activity despite favourable gold prices. Both economies have since recovered as the effects of the pandemic eased and commodity prices strengthened.
Guyana, however, has recorded a stronger trajectory following the expansion of offshore oil production. The World Bank cautioned that countries such as Guyana face the parallel challenge of managing revenue volatility and avoiding procyclical fiscal policies as public finances expand rapidly.
Across Latin America and the Caribbean, the World Bank projects economic growth of 2.2 per cent in 2026, broadly in line with the 2.4 per cent recorded in 2025.
The report said regional growth remains modest, although countries pursuing sound and durable policy choices are recording stronger performances, including growth consistently above 3 to 4 per cent, increased investment and greater market confidence.
El Salvador and Paraguay are among those outperforming the regional average, supported by improved security conditions, fiscal consolidation and private investment. Panama and the Dominican Republic have also sustained strong growth.
Argentina is projected to expand for three consecutive years from 2025 to 2027, which the World Bank said would be the first such period in nearly two decades, supported by fiscal adjustment, tax reforms and a more open economy.
“Latin America and the Caribbean has the potential to achieve stronger and more ambitious growth,” World Bank Vice President (VP) for LAC Susana Cordeiro Guerra said.
She said countries that have maintained sound macroeconomic frameworks, strengthened institutions and advanced reforms are demonstrating that stronger growth is possible.
The report warned that risks to the region remain tilted to the downside, with energy price volatility capable of slowing disinflation and keeping central banks cautious. High real interest rates, meanwhile, continue to constrain credit and investment, while high debt and interest burdens limit fiscal space and public investment.
For Caribbean economies that depend heavily on tourism, transport and logistics, changes in global demand, air travel costs and the broader international economic environment remain key vulnerabilities.
The report also highlighted the potential impact of artificial intelligence (AI) on productivity and employment across the region.
Firms are increasingly adopting AI, although the technology is rarely being integrated into core business processes. Across the region, a median of 17 per cent of working-age adults report using generative AI tools, roughly half the rate recorded in the United States (US) and Canada.
The World Bank said the main barriers to productive AI use are not necessarily cost or access, but managerial know-how, workforce skills and the ability of firms to reorganise around the technology.
“A powerful tool is less relevant if workers and firms lack the capacity to act on what it produces,” World Bank Acting Chief Economist for Latin America and the Caribbean Carlos Rodriguez-Castelan said.
The report estimates that about eight per cent of the region’s workforce is employed in high-skill, knowledge-intensive occupations that could be enhanced by AI, while approximately 10 per cent work in routine cognitive occupations more exposed to automation.
A further wave of technological change could eventually affect physical work as automation hardware becomes less expensive, with about a quarter of workers employed in routine manual occupations that may be exposed.
The World Bank recommended expanding technical and short-cycle training, strengthening firms’ capabilities, and modernising digital Government and data systems.
It also pointed to the potential of low-cost, locally adapted AI applications, or “small AI”, in areas including education, telemedicine, public service delivery, agriculture and support for small and medium-sized businesses.